Fisher & Paykel Healthcare Corporation Limited (NZSX:FPH, ASX:FPH) today announced that expanding clinical applications for its medical devices and new products contributed to record operating revenue of NZ$516.7 million for the year ended 31 March 2012.
The company reported net profit after tax of NZ$64.1 million, compared to NZ$52.5 million for the prior year. The prior year result included one-off non-cash deferred tax charges of NZ$11.5 million. In constant currency terms, and excluding the prior year deferred tax charges, the company’s net profit after tax grew 23%, primarily as a result of revenue growth, disciplined control of expenses and other efficiencies.
The company derived approximately 52% of its operating revenue in US dollars. In US dollars, the company’s respiratory and acute care product group (RAC) operating revenue increased by 18% and obstructive sleep apnea (OSA) product group revenue increased by 7%, over the prior year. “Strong growth in our RAC product group was driven by rapidly growing acceptance of our products which are used in applications outside of intensive care ventilation, with operating revenue from consumables used in those new applications increasing 24% in constant currency terms”,commented Fisher & Paykel Healthcare’s CEO, Mr Michael Daniell. “In our OSA product group, constant currency flow generator revenue growth of 18% over the prior year reflected strong growth from our ICON range. Mask revenue reduced 4% in constant currency terms, but began to improve late in the year, following the launch of the first of a number of innovative new masks”.
The company’s directors have approved a final dividend for the financial year ended 31 March 2012 of 7.0 NZ cents per ordinary share (2011: 7.0 cents), carrying full imputation credit based on a tax rate of 28%. For New Zealand resident shareholders that results in a gross dividend of 9.722 cents per ordinary share. Eligible non-resident shareholders will receive a supplementary dividend of 1.235 NZ cents per ordinary share. The final dividend will be paid on 6 July 2012, with a record date of 22 June 2012, and ex-dividend dates of 18 June 2012 for the ASX and 20 June 2012 for the NZSX.
The company offers a dividend reinvestment plan (DRP), under which eligible shareholders may elect to reinvest all or part of their cash dividends in additional shares. A 3% discount will be applied when determining the price per share of shares issued under the DRP and will be applied in respect of the 2012 final dividend and future dividends, until such time as the directors determine otherwise.
Research & Development, Selling, General & Administrative expenses
Research and development (R&D) expenses increased by 7% over the prior year to NZ$42.0 million, representing 8.1% of operating revenue. The company continued to expand its product and process research and development activities, and current new product projects include OSA masks, flow generators, humidifier systems and respiratory and acute care consumables. Selling, general and administrative (SG&A) expenses increased 1% to NZ$142.6 million, or 6% in constant currency terms, as the company continued to expand its operations and its sales teams in the North America, Europe and Asia-Pacific regions.
During the year the company invested NZ$67.5 million of capital expenditure, which included equipment for increased manufacturing capacity, new product tooling, replacement equipment and NZ$47.4 million for construction of the third building on its Auckland site. The ramp up of manufacturing of consumable products at the company’s facility in Tijuana, Mexico progressed as expected with an increasing quantity and range of the company’s products now manufactured there.
Foreign Exchange Hedging
To protect the company from exchange rate volatility, the company had in place at 31 March 2012 a mix of foreign exchange contracts and collar options, up to five years forward, with a face value of approximately NZ$450 million. These instruments hedge the company’s net exposure. At the commencement of the 2013 financial year, the company had in place approximately 64% cover for the US dollar and approximately 65% cover for the Euro at average rates of approximately 0.75 US dollars and 0.46 Euros to the New Zealand dollar. The company closed out foreign exchange contracts in the 2010 and 2012 financial years, which will contribute NZ$17.8 million in the 2013 financial year and NZ$21.3 million in the 2014 financial year to operating profit but not to cash flow, as the cash was received in the 2010 and 2012 financial years. Those instruments were progressively replaced with new instruments that form part of the company’s current foreign exchange hedging.
Outlook for FY2013
“We expect our underlying revenue growth to begin to accelerate this year, particularly in the second half, as a number of new products, including new OSA masks, are introduced around the world. We also anticipate a continuation of strong growth in demand for our products, which are used in a broad range of respiratory and surgical applications. We expect to continue to improve constant currency operating margin, with faster growth in higher margin differentiated products, cost reductions and other efficiencies. Exchange rates have continued to be very volatile. For the 2013 financial year, based on an exchange rate range of 0.75 to 0.80 for the NZD:USD for the remainder of the year, we expect our operating revenue to be in the range of NZ$540 million to NZ$560 million and net profit after tax to be in the range of NZ$62 million to NZ$70 million”, concluded Mr Daniell.
Financial Statements and Commentary
Attached to this news release are condensed NZ dollar financial statements and commentary. For convenience the income statement has been translated into US dollars. The US dollar financial statement is non-conforming financial information, as defined by the NZ Financial Markets Authority. The company’s financial statements for the year ended 31 March 2012 and the comparative financial information for the year ended 31 March 2011 have been prepared under the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
A constant currency analysis is also included. A constant currency income statement is prepared each month to enable the board and management to monitor and assess the company’s underlying financial performance without any distortion from changes in foreign exchange rates. The constant currency data provided is an estimate of the changes in the main income statement items after excluding the impact of movements in foreign exchange rates, hedging results and balance sheet translations. The data is based on the NZ dollar income statements for the relevant periods which have all been restated at the budget foreign exchange rates for the 2012 financial year.
The constant currency analysis is non-conforming financial information, as defined by the NZ Financial Markets Authority, and has been provided to assist users of financial information to better understand and track the company’s financial performance without the impacts of spot foreign currency fluctuations and hedging results.
Full Year Results Conference Call
Fisher & Paykel Healthcare will host a conference call today to review the results and to discuss the outlook for the 2013 financial year. The conference call is scheduled to begin at 10:00am NZST, 8:00am AEST (6:00pm USEDT) and will be broadcast simultaneously over the Internet. To listen to the webcast, access the company’s website at www.fphcare.com. Please allow extra time prior to the webcast to visit the site and download the streaming media software if required. An online archive of the event will be available approximately two hours after the webcast and will remain on the site for two weeks.
To attend the conference call, participants will need to dial in to one of the numbers below at least 5 minutes prior to the scheduled call time and identify yourself to the operator. When prompted, please quote the conference code of: 76732439.
New Zealand Toll Free 0800 452 569
USA Toll Free 1866 242 1388
Australia Toll Free 1800 354 715
Hong Kong Toll Free 800 968831
United Kingdom Toll Free 0808 234 7860
International +61 2 8823 6760
An audio replay of the conference call will be available approximately 2 hours after the call and will be accessible for two weeks by dialing one of the numbers below. When prompted please enter the conference code of: 76732439.
New Zealand Toll Free 0800 445 136
USA Toll Free 1866 214 5335
Australia Toll Free 1800 766 700
Hong Kong Toll Free 800 901596
United Kingdom Toll Free 0800 731 7846
International +61 2 8235 5000
About Fisher & Paykel Healthcare
Fisher & Paykel Healthcare is a leading designer, manufacturer and marketer of products and systems for use in respiratory care, acute care and the treatment of obstructive sleep apnea. The company’s products are sold in over 120 countries worldwide. For more information about the company, visit our website www.fphcare.com.
Contact: Michael Daniell MD/CEO on +64 9 574 0161 or Tony Barclay CFO on +64 9 574 0119.